UMD format's outlook 'bleak', warns analyst

US market watcher NPD has described the outlook for Sony's PlayStation Portable-friendly UMD format as "bleak". PSP users are not opposed to the disc format, but they're finding the range of available content limited and the price uncompetitive, the researcher said this week.

NPD bases the prognostication on a survey of around 55,000 consumers aged between six and 44. Many of them are attracted to the PSP's non-gaming functionality, though gaming remains the focus of the uses they put the handheld console to. Still, over 40 per cent said the ability to watch movies or TV shows on their PSPs were very important factors in their decision to purchase the device, NPD's report, PSP Functionality and Content Study reveals.

Indeed, almost two-thirds of respondents said they own movie and TV content on UMD. The remaining third said it was likely they will buy a UMD in the future, NPD said. The trouble is, these and other PSP users are also keen on downloading content or transferring it over from a PVR or DVD.

There's clearly a demand for content, and PSP owners are happy to consider a range of formats and means to acquire it, including the proprietary UMD. But, NPD warned, if UMD doesn't appear to offer a compelling alternative, consumers will look elsewhere.

"As retailers and movie studios alike continue to scale back on the number of UMD movies and TV shows they carry or release, the outlook for the UMD format is bleak," NPD forecast.

"PSP users state the main barrier to purchasing UMDs is price, followed by the available movie/TV selection," it added. "If the right content was priced more competitively with DVDs, UMD sales may see a lift. Additionally, UMD sales may benefit if manufacturers and retailers focus on raising awareness and providing easier access."

It's the classic self-fulfilling prophecy scenario: content vendors pull back from UMD because demand is weak, which only serves to reduce the format's uptake even further.

Content vendors do appear to appreciate this, and we're seeing a number of DVD retailers begin to discount UMDs, presumably to boost sales rather than simply rid themselves of unwanted stock.

Yet, if Apple's alleged attempt to persuade Blu-ray Disc vendors to bundle iPod-compatible copies of movies on their products is anything to go by, it's arguable that the rise of high-capacity storage media are going to limit the demand for UMD, as will the rise of download services. ®